By Liam Fitzgerald, CFP^®

Many young doctors start saving for retirement using a SIMPLE-IRA for their practice. As the name implies, SIMPLE-IRAs are attractive since there are no costs to set up or administer the plan, and staff contributions are limited to a 3% of pay match. The drawback is that contributions on behalf of the doctor are limited to salary deferrals of up to $13,000 ($19,500 if 50 or older), along with a 3% of pay matching contribution.

When a doctor can afford to save more, they typically move up to a 401(k) plan, which allows deferrals of up to $23,000 ($30,500 if 50 or older) and total contributions of up to $69,000 ($76,500 if 50 or older) including deferrals, safe-harbor, and profit sharing contributions.